Joint Offer Not Effective Where Claims Remain Against Some
Defendants, Panel Says

By KENNETH
OFGANG, Staff Writer

A joint offer of
settlement by multiple defendants cannot be the basis of an expert witness fee
award unless all of those defendants obtain favorable judgments, this
district’s Court of Appeal has ruled.

Div. Three
Tuesday overturned Los Angeles Superior Court Judge Elizabeth White’s ruling
that 14 defendants who obtained nonsuit in a toxic exposure suit were entitled
to $206,000 in costs under Code of Civil Procedure §998. Those defendants were
tried jointly with six others, as to whom the jury deadlocked and retrial is
pending.

The
plaintiff, Brian Kahn, claimed the defendants were responsible for injuries he
suffered after being exposed to hazardous gases during the 15 years he lived at
a San Fernando mobile home park prior to suing. The defendants and their
predecessors-in-interest, he claimed, had used the site for industrial waste
disposal prior to 1996.

$75,000 Offer

The 20
defendants joined in a §998 offer of $75,000, which Kahn rejected. The case went
to trial in March of last year, and in May White granted nonsuit as to all but
six defendants.

The trial
continued for five more days, followed by six days of deliberations and a
mistrial due to jurors’ inability to reach a verdict as to any of the six
remaining defendants.

The 14 dismissed
defendants filed a memorandum of costs, claiming, among other items, more than
$206,000 in expert witness fees. They claimed that the total of such fees was
nearly $300,000, and that since they represented 70 percent of the total number
of defendants, they should recover 70 percent of their fees.

In siding with
the defendants, White reasoned that they had joined in a valid §998 offer, that
the plaintiff failed to obtain a verdict against them for more than the amount
of the offer, and that the apportionment of the costs proposed by the
defendants was reasonable.

Justice’s
Opinion

But Presiding
Justice Lee S. Edmon, writing for the Court of Appeal, said the trial judge’s
reasoning was erroneous.

Edmon noted that
§998 makes no reference to joint offers, but that such offers have been
recognized as valid in certain circumstances. She also noted that two lines of
authority have developed regarding when parties making a joint offer may
recover expert witness fees under the statute.

Under one
approach, fees may be recovered by an “absolute prevailing party”—a party
absolved of all liability—regardless of the resolution of the plaintiff’s
claims against the other parties. Under the alternative, “comparison” approach,
however, the total of all amounts recovered against the parties making the
joint offer is compared to the amount of the offer in order to determine
whether the final result was more favorable to the party rejecting the offer.

The latter
approach, the presiding justice concluded, is more consistent with the purposes
of the statute because it encourages settlement and discourages gamesmanship.

‘Absolute
Prevailing Party’

“The flaw in the
‘absolute prevailing party’ approach is well illustrated by the present case,”
Edmon wrote. While the plaintiff could only assess reasonableness of the
$75,000 offer by comparing it to what he thought the totality of his claims was
worth, she explained, that total value has not yet been determined.

“As a result [of
there not being a final judgment as to all defendants], all we can determine at
this juncture is that the offer made by 20 defendants exceeds Kahn’s recovery
against 14,” the presiding justice wrote. “Neither we nor the trial court thus
can evaluate whether the offer exceeded the judgment, and the award of expert
witness fees therefore was premature.”

To hold
otherwise, she continued, “would create an incentive in every multi-defendant
case for the defendants to jointly make a low-ball offer that would guarantee
individual defendants enhanced costs if any one of them were to be dismissed or
found not liable.” Instead of encouraging reasonable offers, she said, “it
would encourage defendants to make unreasonable offers for the sole purpose of
recovering enhanced fees.”

The court also
addressed another issue, holding that the defendants’ cost memorandum, filed 17
days after electronic service of the notice of entry of judgment, was timely.
The panel reasoned that Code of Civil Procedure §1010.6(a)(4), which provides
for an extension of two court days in the time to respond to a paper or
pleading when that document has been served electronically, applies.

By rule, Edmon
explained, a cost memorandum must be served and filed within 15 days after
service of the notice of entry of judgment or dismissal. Section 1010.6(a)(4),
she concluded, extends this time by two court days if the notice of entry of
judgment is served electronically, regardless of which party served it.